"For me the most important thing is intuition. The markets represent an âintelligent chaosâ globally. This is a fantastic idea. Thereâs not a deliberate intelligence in the markets, itâs more of structural intelligence. I think that the only way to have good performance in the markets and to earn money is with the help of intuition.â â Jochen Steffens Hello: Here are a few examples of recent trades that were opened based on the rules of the strategy discussed here. This is what follows the optimization of the USDCAD Hedging strategy. Developing an extensive trading system is only worthwhile if one can be sure that the trading signals of the system can be implemented in real trading. A correct trade may first go in the forecasted direction before a trend reversal. One of the first signs of a trend reversal is the breaking of an important trend line. However, the violation of the trend line maynât only be a signal of a change in trend; it could also be a sideways trend or a price pattern, which later proves to be a reversal or a consolidation. The current value of a price is also something that mustnât be ignored. Value, and its relation to price, is a matter of future price gain. Future prices will emerge from what other people do after you get filled. Any transaction is an agreement over current price with a disagreement over future prices. Or as Buffet puts it: price is what you pay, value is what you get. If value for us is determined by future transactions, it canât be known the moment we put in our order. Only afterwards will it become clear as the position starts showing us a profit or a loss. Therefore one needs to have a strategy that can handle this kind of scenario; even if itâs a choppy market. A hedging strategy is well adapted to handle choppy markets easily. The choppy market cannot make up its mind. It often changes direction for no apparent reason â something clearly visible on many timeframes. This means investors are torn between being bullish and bearish and neither the bulls nor the bears can gain the upper hand. This usually happens during periods of no dramatic news or just before a change in the trend. This market is usually difficult to assess and trading usually produces more loss than gains (unless one uses a hedging strategy). Entry into such a market, calling both long and short trades would therefore be recommended. A market can definitely rip higher for long time, but at some point itâll have to rest and consolidate, and sometimes itâll even come back down to earth and reverse all those spectacular gains. When trading with this strategy, entry should be made in the medium to long term main direction, but having the possibility of a reversal in mind. A corresponding signal and an early entry may likely return or not return to the vicinity of the stops placed. Trade Examples There is a need to show you some trades that were taken based on the trading method discussed here. Spreads were not considered in these examples. The trades were only on the USDCAD. They were placed on the same day and nearly at the same time. Example 1: A. Order: Buy Entry date: November 18, 2011 Entry price: 1.0268 Stop loss: 0.9768 Take profit: 1.0418 Exit date: November 23, 2011 Exit price: 1.0418 Status: Closed Profit/loss: 150 pips B. Order: Sell Entry date: November 18, 2011 Entry price: 1.0270 Stop loss: 1.0770 Take profit: 1.0120 Exit date: December 2, 2011 Exit price: 1.0120 Status: Closed Profit/loss: 150 pips Example 2: A. Order: Buy Entry date: September 5, 2011 Entry price: 0.9869 Stop loss: 0.9369 Take profit: 1.0019 Exit date: September 12, 2011 Exit price: 1.0019 Status: Closed Profit/loss: 150 pips B. Order: Sell Entry date: September 5, 2011 Entry price: 0.9862 Stop loss: 1.0362 Take profit: 0.9712 Exit date: September 16, 2011 Exit price: 0.9792 Status: Closed Profit/loss: 70 pips Note: Prior to the examples shown above, a pair of short and long trades was opened on August 22, 2011. The short trade hit its 150-pip target on August 31, 2011 while the remaining negative trade later got its loss reduced to approximately -50 pips on September 2, 2011 (owing to some rally on the USDCAD). The remaining negative trade was closed after the exit criterion was met. As you can see, one trade was closed at +150 pips and the other trade was later closed at -50 pips. The closed profit was bigger than the closed loss. That is the logic. Also remember that 4-hour charts are used only for the purpose of examples. The strategy is non-timeframe specific. A Free Gift to Interested Readers This strategy has already been sent as a gift to my trainees and subscribers, but I also want to give it free to 20 readers only. Only 20 of my readers would get it free, and therefore, itâll be on first-come-first-served basis (for the early bird catches the worm). After 20 copies have been sent out, no more copies of this strategy would be made available by me. This is one way of compensating avid readers of my articles. Readers now have a chance to posses this strategy. Itâll be in form of an easily understood and do-it-yourself format. It comes with simple explanation, entry criteria, exit criteria, alternative exit, stop loss, effective trade management and other valuable hints. Itâll also contain recent trades and their accompanying charts. Please send me an email titled âA Request for Strategyâ to get your own free copy before itâs too late. I conclude this article with a quote from Jochen Steffens: âAt the risk of oversimplification, youâve to turn off the mind for trading. The mind is very powerful and helpful in all areas of life, but usually not on the markets. Itâs more of a limiting factor here. Thatâs because the mind is completely overwhelmed. During trading we have âvoicesâ in our head that recommend doing this or that or expecting one or the other movements; but the many voices arenât only needless but counter-productive. Use your mind when you define and test a setup â turn your mind off during trading. I think that trading is approximately 80% psychology and 20% technique.â NB: Please watch out for my coming articles with these titles: âMy Typical Trading Day,â âA Traderâs Trick Entry Technique,â âMaking Money out of Losses â A Blessing in Disguise,â âAchieve a Better Hit Rate with Gap Trading (Using the Logic Yourself),â âPlay the Markets Victoriously with Nano-cent Accounts,â âWhy Itâs Difficult to Do the Right Things in the Markets,â âHow to Identify a Sideways Market â Be Safe!â âA Negative Expectancy System â Pushing Against the Wind?â âTrading Signals,â âAn Intraday Moves Catcher â A Wealth Generating System,â âUnlock the Power of Everlasting Triumph in the Markets (Parts 1 - 12),â âHow to Handle Uncertainties in the Markets,â âThe Issue of Stops (Come Back! Oh Come Back!),â âA Hedge Funds Strategy,â âMy Hedge Funds Strategy Update,â âExperiment with Different Exit Tactics,â âMastering the Market Equilibrium Zones â A Time-sensitive Method,â âHow I Apply Risk Management â Part 3,â âA Simple Positive Expectancy System â Trading Effortlessly,â âTestimonies from My Subscribers (2),â âResist the Lure of High Risk â Part 4â âWorst-case Scenarios â Facts Are Sacred,â âEffective Swing Trading in Forex,â âGap Trading Revisited,â â3 Recent Gap Trades,â âDeveloping the Right Attitude towards Losses - Part 4 (Losses Arenât Abnormal),â âThe True Holy Grail â The Long Sought for,â âForex Trading Vocabulary,â â Clarifying Some Issues â Part 6,â âNavigating Turbulent Markets â A Double Timeframe Analysis,â âBefore You Open that Trade,â âCogent Trading Biases,â âOverview of My Signals Strategies - Can You Become a Super Trader?â âWinning Trades, Losing Trades,â âUncertainty Has Become My Ally â An Interview with a Dogged Market Speculator,â âThe Cost of Discipline,â âMonthly Market Review,â âI Canât Express How Grateful Iâm to You!â âYearly Trading Update (2012) â The Big Picture,â âWhat Weâve Decided to Do in the Markets - Trend Following It Is!â âAnnual Trading Results (2011) â I Was Perfecting My Trading Skill,â âMonthly Trading Report (December 2011),â etc. Your questions and opinions are highly welcome. Thank you. With best regards, Azeez Mustapha Forex Signals Strategist, Funds Manager &Coach
well, the first question is, What's so special about 150 pips? I guess that's as good a target as any. Sounds kind of arbitrary, at least the fib trades shoot for 5.7. oh well. So 150 in usdcad, how bout other pairs? 150 in them too? I''ll remember that next time I'm in USDCAD, 150 pips and I'm out of there because that's what some guy on the internet does. thanks for the gift see? not all of us traders are just out to make money